Wednesday, March 14, 2012

Make your voice heard. Sign our petition calling for an end to the attacks on public educators and greater support for school funding.

Did you see the Politifact today on class size? The DOE says “teacher student ratio’s have remained stable.” Do I need to show the bull on the toilet again?

I think there is too much evidence to the contrary to accept as fact Charles Pyles’ assertion: “Pyle said student-teacher ratios have remained stable.”

Even if we put the data set Pyle claims was the result of a VA DOE error, there is too much corroborating data to show that the number of teachers in Virginia has gone down and the number of students has increased.

First, there is a 9/19/2011 report from DOE to the Advisory Board on Teacher Education and Licensure which shows that the teacher supply has decreased from 100,908 in 2008-2009 to 98,792 in 2010-2011.

Second, on 7/4/2008 VRS reported to JLARC that there were 147,149 in the teacher group as of June 30, 2008. On 7/11/2011 VRS reported to JLARC that as of June 2011 there were 145,707 in the teacher group. The teacher group includes all school board employees, but this dip is indicative of a decrease in the number of teachers.

Third, CQ Press reports that Virginia showed the sharpest percentage drop of teachers in the nation. Between 2000 and 2010 there was a 16.7% drop according to this source.

Monday, March 12, 2012

What is the consequence of the Saturday Night Massacre – the rushed passage of the conference report of SB 498, SB 497 and HB 1130? The House and Senate passed a 21 page bill just minutes after receiving it and with no fiscal impact statement for the bill. The debate, especially in the Senate, confirms that they did not know what they were voting on. The bottom line is that Virginia’s state and local employees will pay the price for the General Assembly’s 20-year record of underfunding VRS.

I will try to offer a quick and dirty analysis of who takes a hit and who does not.

First, there are no changes for those who are already retired.

Second, all employees who have fewer than 20 years of experience and who retire before age 65 will see their annual Cost-of-Living-Adjustment (COLA) delayed until age 65.

Current VRS Plan 1 members who are not vested (those having less than 5 years of service credit as of January 1, 2013) and Plan 2 member (individuals hired after July 1, 2010) will see three changes which will reduce their ultimate retirement benefits:

1. Average Final Compensation (AFC) will be calculated based on the average of their highest 5 years rather than the current 3 years (Plan 2 already uses 5 years).

2. The COLA will be capped at 3% rather than the current 5% (8% in Plan 2).

3. The multiplier in the retirement formula will drop from 1.70% to 1.65%.

All employees hired after January 1, 2014 will have a mandatory hybrid pension system. This system will have a defined benefit (DB) component with a 1% multiplier and a defined contribution (DC) component. The employee must pay 4% of salary toward the DB and 1% toward the DC. The employer will match up to 3.5% of employee contributions.

The Joint Legislative and Audit Commission’s actuarial analysis indicates that a 60-year-old teacher making the average teacher salary will receive $9,129 less in annual benefit if they make the minimum required contribution and $874 less if they make the maximum contribution. In short, future teachers will pay more to get less.

Finally, the conference report requires the employee to make the 5% employee contribution, but the employer must give off-setting raises. This may be phased-in 1% per year.

This is a quick and dirty analysis. A much more detailed analysis will follow. The impact of the bill on disability benefits remains unclear. We are going to be doing what none of the legislators did before the vote – reading and analyzing the bill.

Kudos to Delegate Johnny Joannou! He refused to sign the conference report, saying that he did not know enough about the bill. Unlike the others, he knew enough to know what he did not know.

Saturday, March 10, 2012

Upon leaving the GA yesterday, I thought consideration of the retirement legislation was going to be delayed until the special session; however, last night a general assembly staff member called me to tip me off to the fact that the Governor had called Senator Watkins and Delegate Jones to the mansion, and at his request the conference reports on SB 498 and HB 1130 were considered today.

I spent the morning working with the lobbyists from the Virginia Governmental Employees Association in a futile effort to line up votes to kill the bills.

The last day of the session dragged on. The remaining contentious issues were retirement and transportation. At 4 pm, there was still no released report on the retirement legislation. Apparently, the first report did not reflect what the House felt that they had agreed to and the bill was rewritten.

They wrote the bill on the fly the last day of the session.

This issue seems a little too important to handle in a last minute scramble!

I was able to attend the Senate briefing. Interestingly, the analysis of the bill included everything except any information regarding the impact of the legislation on future retirees. I asked several Senators to ask what the impact of the bill on future retirees would be, and Tommy Norment was the only one willing to ask the question.

In response to Norment’s question, VRS Director Bob Shultz said one thing that was helpful, "That's where the savings are - reducing the benefits of retirees." But he indicated that the reductions were "slight." Do you consider a $9,000 a year reduction slight?

I was able to speak before the House Democratic Caucus, and among other things, I asked them if future teachers caused the VRS current shortfall.

In the Senate HB 1130 passed on a 34-6 vote. Here are the few who stood by us:

Carrico, Deeds, Edwards, Garrett, Puckett and Puller.

Five were with us on SB 498:

Carrico, Deeds, Edwards, Puckett, and Puller.

I love Senator Janet Howell, but she served on the conference committee for this bill, and she said on the Senate floor that this bill had "no impact on current employees" and that is not only not true, it may have led some of her fellow Senators to vote based on a false understanding of the impact of these bills.

The Senate also passed SB 497 which requires local government employees to pay the 5%employee contribution and requires off-setting raises. This can be phased in one percent a year over 5 years.

Had Edd Houck still been in the Senate, he would have held his caucus together for us. Some of those who we worked the hardest to elect turned their backs on us today.

In the House Delegate Toscano did an excellent job of asking that the decision be delayed until the special session. Delegate Surovell made the point that this legislation makes workers pay for the irresponsibility of the General Assembly. Delegate McClellan protested that this complex bill was provided just minutes before the vote. Delegate Kory questioned voting in the "dead of the night" on such an important piece of legislation.

HB 1130 passed the House on a 60-34 vote. Here are the Delegates who voted with us:

Friday, March 9, 2012

When the General Assembly adjourns tomorrow, they will leave town without addressing the budget, VRS, and transportation. Those three items will be taken up in a special session.

It is especially good for us that we will have more time to lobby the VRS legislation. Huge decisions which will have a great impact on public employees should not be made in the rush of the final days of the session. Both the House and Senate proposals will have a significant negative impact on the already modest pension benefits received by Virginia’s public employees. Both proposals have significant start up costs, no immediate impact on the unfunded liability, and no significant savings until far into the future. I am very glad that we will have more time to bring the light of truth to the debate.

I urge you to take the time to view yesterday's debate of HB 576 in the Senate.

Allow me to note that despite what Senator Obenshain said, VEA did not work with him on HB 576 or SB 438.

As you watch the video, you will see the "VEA brass" in the gallery. I was not with them, as I was working on the first floor fo the Capitol.

I encourage you to share this video with your colleagues.

Tomorrow is the last day of the regular session, but as the special session lies ahead, I'll be posting on this blog, but not daily. When the special session convenes, I'll resume daily postings.

Thursday, March 8, 2012

The defeat of HB 576 gives VEA a major legislative victory in what can only be described as a very anti public education General Assembly session. We have work on the budget and VRS legislation that is yet to be done, but let’s reflect on the fact that the VEA was up against the Governor, the Virginia Association of School Superintendents, and the Virginia School Boards Association and we won.

I am seeking the video of today’s debate, and I will post it as soon as I have it. I think you will especially enjoy the remarks of Senators Hanger and Puckett.

It is very important to note that beating this bill was a VEA team effort. Every member who emailed, called, donned black or attended a regional rally; VEA’s leadership; and the entire VEA staff all had a part in killing this bill.

Our legal staff, who did the research that showed that those who already held continuing contract had a property right of which they could not be legally deprived, gave us the ammunition to force a major rewrite of the bill to "grandfather" all who already had continuing contract.

VEA VP Meg Gruber’s remarks regarding the impact of the bill on Navy wives led to an amendment and greater scrutiny of the bill.

We used the teacher turnover, teacher demographic information and teacher supply information to our advantage. We also pointed out that none of our neighboring states were denying teachers fair dismissal procedures. We also pointed out that all state workers have a process more advantageous to the employee than what teachers now have. I could go on, but the fact is that we lobbied the bill.

Although the vote was 23-17, I really think there were 25 Senate heroes. Had Senators Norment and Watkins not taken a Valentine’s Day stroll leading to the defeat of SB 438, the Senate Companion to HB 576, SB 438 would have passed the House. But, there were 23 heroes today. We need to thank them all.

While we are at it, we should thank the Delegates who voted against the bill. Although the bill passed the House, we got a stronger vote than anyone expected on February 13th, and that, too, was a factor in its ultimate demise.

Delegate Bobby Orrock spoke effectively against the bill on the House side. Seems to me that Bobby gave members of his own party some cover.

This bill will be the subject of Senate Education and Health Committee deliberations between sessions. We will need to participate in those deliberations. Hopefully, the bill will be amended to include fair treatment of teachers and principals. If it does not – we will fight it once more.

Friends from both parties stood with us. The vote on this bill should be a major factor as we choose who we will support in the next House and Senate Elections.

But for now – this victory is sweet. I thank you for all you did, and I thank those legislators who stood with us when we really needed them. I urge you to find ways to thank each of them.

Press Release. Check out the press release that VEA distributed about the demise of HB 576.

Wednesday, March 7, 2012

It is hard to believe that the Senate is yet to vote on HB 576, the “Fire the Teacher” bill. The Governor does not appear to have the votes, but they keep putting off what seems inevitable.

The General Assembly appears determined to reduce VRS retirement benefits and have school board employees pay the 5% employee contribution. A committee of conference has been named and must now come to agreement on the bills passed by the House and Senate.

The Senate approach is to create a hybrid plan—part defined-benefit and part defined-contribution—for future hires. The Senate would give school boards the option of requiring employees to pay the 5% employee contribution, but they want to require raises to offset that contribution.

The House approach is to keep the current pension structure, but it reduces benefits by cutting the cost of living adjustment and the manner in which average final compensation is calculated. For new hires, the multiplier would go from 1.7% to
1.6%. In addition, the House wants to require payment of the employee contribution without requiring any off-setting raises.

Our goal is the make the best of a bad situation by advising conferees to choose the least harmful aspects of each approach. For this reason, we are asking you to write the conferees working on the two bills and deliver the following message:

It is my understanding that you will be serving on the committee of conference for House Bill 1130 and Senate Bill 498. As you work to develop a compromise between the House and Senate approaches to VRS reform, please consider the effects these bills will have upon achieving the goals of the VRS: to attract high quality personnel, to retain high quality personnel and to allow employees who have served with dedication to retire in a timely manner with adequate benefits.

With these goals in mind, I ask that as you develop your conference report, please:

1. Preserve the defined benefit system as opposed to a hybrid plan,
2. Grandfather current employees,
3. Include a commitment to fund the Board Certified Rate (Establish Intent to Pay),
4. Maintain the current disability retirement for school employees, and
5. Include a requirement for a salary offset for increased employee contributions.

The outcome of your deliberations will be of great consequence, and I ask that you bring representatives of the organizations of affected groups of employees into the discussions as you weigh your options.

Monday, March 5, 2012

This has been a miserable General Assembly for public education advocates. We’ve had so much thrown at us that some really bad bills got by when we were trying to fight the REALLY BAD bills.

Nothing has been worse than the Ground Hog Day nature of the Senate’s consideration of what we have come to call the “Fire the Teacher” bill. HB 576 allows experienced teachers to be fired without reason and without due process at the end of each three-year term contract. Every day your lobbyists get up, lobby against the bill in the morning, go to the Senate, and see the bill go by for the day.
When Senator Martin asked, once again, that the bill go by for the day, Senator Norment, the President pro tempore of the Senate, declared on the floor that the final vote will be taken tomorrow, seemingly impatient with the continued delay.

I’ve lost sleep over this one, and fear it has taken years off of my life!

The Virginian-Pilot recently ran an excellent editorial regarding the tuition tax credit/voucher bills that have passed in this General Assembly session. The budget impasse in the Senate may be our last chance to stop these bills from being implemented. The Senate Democrats could demand that this not be funded as one of their conditions for adopting a budget. Regardless, read for yourself!

Friday, March 2, 2012

On Tuesday of this past week, the Virginia Pension Protection Coalition brought in three national level experts on pension policy. Monique Morressey of the Economic Policy Institute offered excellent testimony. I thought I would share it with you today. If you haven't done so, please go the www.veanea.org and send a letter to your delegate and your senator on this issue. You'll see the hotlinks to the letters in the upper right hand portion of the page.

Draconian changes to the Virginia Retirement System proposed by both houses of the Virginia General Assembly would not only have a deleterious effect on the retirement security of public employees, but also greatly hinder the ability of school systems and other public employers to attract and retain skilled workers, eroding the quality of education and other public services. People don’t go into public service to get rich—salaries are around 20% below what workers with the same education earn in the private sector—but state and local government workers are at least assured of secure benefits.

Pensions, in particular, are probably the single most important recruitment and retention tool public employers have in their toolbox. Both the House and Senate bills, however, would scrap this essential and highly-cost-effective tool—both by gutting benefits and, in the case of the Senate bill, by siphoning off funds and destabilizing the system.

The House bill also amounts to a breach of trust, since benefit cuts would affect not just future workers going forward but also current employees who chose their careers based in part on the promise of a secure retirement. While many workers may have little choice but to remain on the job, especially in this economy, the cost savings achieved by this bait-and-switch would be short-lived because of the effect on recruitment going forward.

In contrast, the Senate bill appears to shield current workers from cuts since participation in the new plan would be voluntary and few workers would voluntarily choose a plan where they bear more of the cost and the risk. However, even if it were a good idea to sacrifice future workers to shield current ones, current workers would nonetheless be harmed because the hybrid would siphon workers and money out of the current system, making it harder to pay down the unfunded liability.

With the exception of the provision in the Senate bill requiring full payment of the actuarially required contribution, the proposed changes to the Virginia Retirement System are extreme and unnecessary. VRS benefits are modest by national standards, with an accrual rate of 1.7% and an average benefit of less than $19,000 in 2009, compared to the national average of 2.0% and $22,438, according to the Center for Retirement Research’s Public Plans database. Meanwhile, the funding ratio is well within the norm for a state pension system in the wake of the recent market downturn: with a funding ratio of 67% in 2010, VRS ranked 63rd out of 125 plans in the database—or slightly below the 77% average (partly due to a failure to pay the full actuarially required contribution).

The Senate bill would create a new hybrid retirement program with both defined contribution (DB) and defined benefit (DC) components. The DB component would have a 1.0% multiplier that generates a 30% replacement rate after 30 years of service and requires a 4% member contribution. The current multiplier is 1.7%, so this amounts to a drastic 41% benefit cut, not counting the fact that employees would also start contributing 4% into the system.

The DC component would not fill the gap, even for the few workers who contribute 5% and receive the maximum 3.5% employer match. Workers would also bear all of the financial and longevity risk and have their savings eroded through high fees (more on this below). Since most workers would not be able to afford a 9% total DB and DC contribution, the direct VRS cost to taxpayers would likely decline once short-term transition costs are factored in. But this unrealistically assumes workers would be willing to accept both below-market wages and bare-bones benefits. Rather, since public sector workers value pension benefits above the cost to employers, the difference would have to be more than made up by higher wages in order to maintain recruitment and retention, and total compensation costs would rise even as workers’ retirement security declined. In other words, there’s no such thing as a free lunch, but the DB lunch is a better value than the DC lunch for both public employers and workers.

While the situation facing the VRS is challenging, it does not warrant the extreme measures being contemplated by the General Assembly. Taxpayers will see little benefit, yet the retirement security of public workers will be irrevocably harmed. So will the ability of Virginia public employers to attract and retain skilled workers—and the reputation of Virginia’s schools and other public services.

Thursday, March 1, 2012

The last meeting of the Senate Committee on Education and Health this morning was eventful.

The good news is that they killed H.B. 947, the bill to allow home school students to participate in public school interscholastic programs. The vote was 7-8. Republican Senator Harry Blevins joined the 7 Democrats to defeat the bill.

HB 1063, Delegate Tata’s bill to repeal the King’s Dominion Act and give school boards control of the calendar, failed on a 6-9 vote.

The full Senate passed by HB576, the fire the teacher for no reason and with no due process bill, once again. This is torture. The word is that the vote will be on Monday. Please keep the calls and emails coming to Senators.

Talking about school funding in this legislative session has been difficult. When we talk about the cuts to school funding, the response is, “How can you talk about cuts, when the Governor ,the House Budget, and the Senate Finance Committee budget proposals add money for schools?” Well, the proposals don't begin to make up for all of the cuts since 2009. There isn’t much difference between what the House and Senate are proposing.

A concrete way to look at the impact for your school division is to check out this chart. It will take a little while to load onto your computer.

Click on first item – “Budget highlights.” Look for the House and Senate tabs. You’ll have to have Excel to read the chart.

As you can see, there are winners and losers. Let’s look at the difference between the funding we had in 2008-2009 and what is proposed by the House. Fredericksburg actually gains 27%, while Lexington loses 27.81%. Statewide the amount in the House budget is 9.71% less – a loss of $511 per pupil. So the small restoration of funds in the House budget falls far short of taking us back to where we were four years ago.

How can you use this? How about if a Lexington teacher wrote a letter to the editor saying something like this:

I keep hearing members of the Virginia House of Delegates crowing about how much they are doing for our public schools. Well, I’ve checked it out, and the House budget provides 27.81% less in state funding for our schools in Lexington that was provided in the 2008-2009 school year.

Our students are suffering. Classes are larger. Course offerings have been reduced, and text books are outdated.

We need some straight talk about investing in the future of our children by providing them with an education of high quality. What we don’t need is less-is-more mumbo-jumbo from our state legislators.

Check out the numbers for your school division. I’m sure you can write a better letter than I.